Getting Real, Real Fast

Your blissfully unaware family and friends notwithstanding, the global financial "situation" appears to be deteriorating rapidly. I hope you have prepared accordingly.

First this morning, I suppose we should address this month's BLSBS. As you know, the period between 8:25 EDT and 8:35 EDT on the first Friday of the month is the only time all month when I actually watch CNBS. Today, the usual crowd of misfits populated my screen. There was The Shill happily expecting glorious growth. The Coug was prowling and LIESman was stuttering, as usual. Then, the party ended when we went "Live to Hampton Pearson at the Labor Department". No real reason for me to rehash the dismal numbers with you as I'm sure you've had enough of that already. I don't wish to add some color, however.

The media will tell you today that gold is rallying on fresh "hopes" on more QE. Bunk. This is not true. Gold is rallying on fear. If gold was rallying on QE, why are stocks down? Why is crude down? Additionally, gold is rallying and extending gains because of a squeeze in the massive spec short position that has been built up over the past month or so.

The last commercial I saw before the numbers were released was a promo for a CNBS program that promises to "show you how you can profit from the declining euro". Looks like the bottom is close there.

The printed NFP was +69,000 but the "birth/death adjustment" was +204,000. This means that, without the BLS statistical make-believe, the actual number might be -135,000. I wonder how shiny LIESman's head will get as he attempts to spin that? Chances are he won't even try.

The 10-year note is now at 1.47%. This is incredible! Even using the nonsensical and worthless CPI, the 10-yr now has a -1.0% real (inflation-adjusted) annual return.

The 30-year Long Bond is at 2.55%. Never in my life did I think I would see the day when the Long Bond yield fell below the stated rate of inflation. Well, OK, maybe I thought it was possible that the Long Bond might yield 10% when the CPI was 12% but parity? At 2.5% Amazing!

And crude is now down over 20% in the past month alone. This in spite of the ongoing, geo-political risk in The Middle East.

Speaking of crude, anyone thinking of buying some had better take a long, hard look at the chart below.

(I just snuck a peek at gold here at 10:10 EDT. UP to $1610. Wow! Continuing to rally post the PM fix. Very surprising.)

As stated above, the metals soared on the BLSBS and are continuing to rally. Fear, short-squeezing and QE anticipation are driving things higher. For gold, a move through and close above $1610 would be very exciting. Your short-term target to watch in silver is $29.

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The current situation is somewhat reminiscent of 2008, when investors rushed into dollars as gold fell from $1,000 to nearly $700 per ounce and silver plunged from $21 to $9 per ounce. Looking in the rear-view mirror, patience has clearly been a smart strategy for investing in precious metals. Gold and silver both skyrocketed off their lows made in 2008 as central banks turned to money printing as a band-aid for a bullet wound. The dollar is currently experiencing strength, but what happens when the Federal Reserve is forced to step in and apply more band-aids, as it did with QE1, QE2, Operation Twist and European swap lines?

Hardly the most erudite thing I've ever posted on the internet, but it's f*cking sweet to see all the Chicken Little gold "bulls" get smoked. These ADD-addled traders, who actuallybelieve in fiat currency deflation have been trying to outdo eachother on how low their gold price targets can go. Maybe a few of them will find their nutsack, having had their balls handed to them today.

Soon, perhaps all this garbage about "gold can only move on QE3", "the Euro is going to collapse" and my personal favourite, "the CoT doesn't matter!" will cease.

with mortgages that everyone is refi-ing with this collapse in rates? Below 3.5% for a 30 year? Do you think the gov't comes in and forces you to refi at a higher rate later? Been thinking about refi-ing my house down from 5%.

Gold is rallying because humans see what is going on, but fail to understand the difference between heavy metal and COMEX paper, and as such they are buying paper with the words "gold" and "silver" stamped all over it, because they know debasement is coming. Oil and stocks will rise when QE actually starts as the money flows into the banks, and the bankers use it for speculation.

People are acting like this rally happened on the back of a QE announcement, rather than dismal data that will almost certainly LEAD TO a QE announcement. Cause and effect are reversed in some minds here.

It's what I've tried to show all along. I went really really margined long on the PMs when I was able to buy gold at $1600 last time and silver at $29. I missed it by a little bit, but I think it will pay off. And yes, this is all physical...and the margin is from credit cards at 0% interest. I still had a little bit of dry powder and added more at the lows. I wish I had used up that last $10,000 or so of cc margin...oh well...there were days when I was worried, but the Turd and all of you helped me to keep the faith. And I still do.

It helps that I'm short the TBTF banks and long FAZ. This will all turn on a dime, and we need to be nimble on those stock calls. The day is coming when Uncle Sugar will bail out the TBTF again, and their prices will increase. BE CAREFUL!

Interesting piece by Raoul Paul. I seem to like a lot of guys who could be called R. Paul.

was in last year of ARM--we might see low rates for another short period of time but I think rates do go higher (how about credit risk) and I just locked myself in so I do not have to worry about that--if I have to I pull out a 1 oz eagle and pay my monthly mortgage--or maybe a 1/2 oz eagle. or a tube of silver eagles.

While I'm somewhat pleased to see the jump in the PMs, it's tempered with the realization that we are damned close to the tipping point. Turd's commentary is dead-on that the bonds are telling the tale...and it doesn't have a happy ending.

As for me, I'm wondering if more Cu-jacketed Pb isn't a better purchase than more Au/Ag.

As developments in the Eurozone veered from bad to awful, with Greece on the brink and Spain getting closer, Switzerland, a speck of land with 7.9 million people surrounded by Eurozone turmoil, has been bracing itself, according to the President of the Swiss National Bank and long-time euro-skeptic Thomas Jordan, for the collapse of the euro.

"We start with the thought that Greece will not exit the Eurozone," he said in an interview in the Sonntagszeitung, and then came the but—actually a whole slew of them.

"Our baseline scenario anticipates a protracted period of great difficulties," he said. "The situation will only calm down when budget cutting and reform efforts start working in the Eurozone, which could be a long time. We're preparing for very turbulent times." And Greece's exit, he said, "can't be excluded”—thus following in the footsteps of Jens Weidmann, President of the German Bundesbank, who’d ventured into a veritable lion’s den with a pungent interview in Le Monde. Read....The President of the Bundesbank Lashes Out.

And even if Greece remained in the Eurozone, “contagion could spread to other countries and escalate the debt crisis." Less worried about trade and banking relationships with Greece, he saw the greatest dangers in the indirect consequences: “It’s conceivable that the entire European banking system gets into trouble. It would pull down the economy of Europe. Other highly indebted countries could get in trouble as well. That would pose high risks for us."

When the SHTF everyone will flock to the US $ and the US market for safety, causing gold to be sold off to create the dry powder they all need to participate. Then as stocks soar along with the dollar, smart money will pour into commodities (Hopefully AU and AG) causing Gold and Silver to rise as most realize the US really isn't any safer than anyone else, just farther back in the collapse cycle. Do I have this correct, or am I missing something ? If I have this correct, how long do you think we have until they figure it out and start selling off the stock market ?

What a dumbass. The guy in the article and the way the sob story is portrayed by the author is what is wrong with our country. Everyone wants a way out for making poor decisions, wants us to feel sorry for him, and wants everyone else to pay for it. Let's just bail everyone one out of everything. Give ME a break (don't worry, giving me a break is costless).

Gold skyrocketing isn't good for the central planners. If gold can decouple with the current bear market and head higher, its going to be balls to the wall crazy gains when the next QE gets unveiled. At least thats my take.

We have around 6 months left of trading in Western markets to protect ourselves or make enough money to offset future losses.

Spend your time looking at the risks of custody, safekeeping, counterparty etc. Assume that no one and nothing is safe.

It seems that a lot of people think the reset is coming AFTER the US elections, but who knows if the wheels will even stay on that long?! The events of the last couple of weeks have me convinced that it is very unlikely we will make to the end of the year - I think the wheels are coming off right now and the time we have left to prep is measured in weeks, not months.

Nice little jump! On Edit:
Well it looks like this is the end? https://www.zerohedge.com/news/big-reset-2012-and-2013-will-usher-end-sc... "We have around 6 months left of trading in Western markets to protect ourselves or make enough money to offset future losses.
Spend your time looking at the risks of custody, safekeeping, counterparty etc. Assume that no one and nothing is safe.
After that…we put on our tin helmets and hide until the new system emerges
And the punchline
From a timing perspective, I think 2012 and 2013 will usher in the end." Raoul Pal

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